Performing a freight audit represents a solution to a very common, costly, problem for any business with advanced logistics needs. Namely, this is how you can detect hidden expenses within the thousands of pages of freight contracts that link you with your freight carrier partners.
A freight audit is a technological solution for a business problem. Contracts and agreements today are simply too long to audit manually. The amount of data is overwhelming and details can be lost. When you harness the power of the right freight audit software, you can cut through the static and get actionable results.
Why Should You Perform Freight Audits?
The length and complexity of any given freight contract may be acting as a smokescreen for issues that are costing your business a lot of money, including clauses that aren't being upheld. This means there's a strong financial incentive to audit these agreements and compare them to the actual data flowing in from shipping invoices.
Value opportunities can be lurking in the gap between the contract's terms and the shipper's true performance. Without a freight audit powered by automation, they could go unnoticed.
Potential focus areas when performing a freight audit include:
- New terms, fees and clauses: Periodic rate adjustments are a fact of life when signing freight shipper contracts. While general rate increases are overt, there may be more subtle changes that you don't detect at first, and that could lead to unexpected expenses in the future.
- Service level agreements not being upheld: Comparing true shipper performance to a contract's terms can reveal examples of service level failures, making your organization eligible for refunds.
- Billing errors or wrongly applied charges: Service level agreements aren't the only part of a contract where reality may not match the wording. It's worth checking every fee and discount to make sure they're all being applied correctly.
- Unclaimed reimbursements: When your business is eligible for a freight cost recovery, do you always collect it? If the relevant clause is buried in a long contract or you don't have a simple way to engage in carrier invoice auditing, you may be missing out on these refunds.
Auditing your freight contracts is a way to reveal these details and many more, illuminating your true shipping costs and putting money back in your pocket.
What Happens During a Freight Audit?
The actual process of a freight audit involves supply chain experts using an advanced technology platform to study all the relevant data around your freight carrier contracts. This means checking the contracts themselves against your complete database of invoices.
The countless resulting data points provide a comprehensive picture of the way your business is interacting with its freight partners, and whether those organizations are performing in line with those contracts. The types of issues detected can be subtle — for example, a double charge for a shipment — but meaningful because they indicate you're owed money.
Following the process of detecting potential causes for reimbursement, the same experts who conducted the search can follow through on reclaiming the funds. By contacting the carriers and pursuing each mistaken charge and erroneous fee, it's possible to significantly improve your logistics finances.
The best audits will also be radically transparent, which means you can see exactly what the professionals have found, determining where every penny of cost savings is coming from. This new level of visibility is a contrast to the opacity that often affects today's supply chain operations, due to the difficulty of keeping up with data volume and velocity.
What's the Impact of Freight Auditing Software?
A modern transportation spend management platform, incorporating powerful freight auditing software features, is a key component to any audit. This level of technology is essential when dealing with long, complex freight contracts and the thousands of pages of invoices generated when dealing with shipments.
Since today's supply chains are driven by digitization and automation, it's only appropriate to lend the same level of high-tech efficiency to auditing your processes and claiming potential reimbursements. Trying to conduct a manual audit amid today's conditions would be arduous for the personnel involved and runs the risk of missing key issues.
Advanced platforms also enable you to compare and contrast the results through an "audit the auditor" feature. This demonstrates your potential savings compared to your current auditing approach, and determines whether a switch in methodology would find extra value for you — and how much.
It's also worth noting that the right transportation spend management solution can deliver numerous other advantages that go together with freight auditing as part of an overall supply chain improvement program. You can seize extra efficiency benefits through contract optimization, business intelligence and other logistics management services.
Ready to Get Started with Freight Auditing?
There's no bad time to get started on the freight audit process. Even if you already audit your processes, comparing that with a potential new approach could reveal extra opportunities for cost savings. Carrier invoice auditing is also a vital part of future-proofing your operations, building an efficient foundation from which you can expand your freight carrier network.
The FreightOptics platform is the proprietary transportation spend management system behind effective, comprehensive and technology-driven auditing. Whether you're solely interested in better freight contract management or you also need parcel auditing, experts using this solution can track down every last cent of potential value within your shipping costs.
Get all the inside details about the audit process, as well as how FreightOptics helps with freight cost control.